Engine Replacement Options

I'm trying to give a little advise and direction to my daughter and son in law on what to do with their boat, and thought that I would get some of your opinions.

Background- It is a '95 Ski Nautique that has the PCM GT40 with around 700 hours. They are the third owner and have had it 18 months. Never a problem until now. It wouldn't stay running so it was taken to a CC dealer. They said it had low compression in two cylinders, so the heads were pulled. They saw valve problems that they believe are from overheating. They stated it happens in these older Nautiques- the muffler starts to go and creates too much back pressure, and then the overheating of valves/head. They point out that the muffler had a number of pin-hole leaks, also from the higher temps.

Options-
1. Dealer says that new heads are $1600 each and if you put new ones on, you have to rebuild the rest of the motor or it won't hold up. At that point they say it is better to go with a new long block and bolt all of you other stuff back on. Their price- $9000.
I've talked to a popular supplier mentioned often on this site and have a few other options.
2. Get new heads for $750 each and put it back together.
3. Buy a new PCM long block for $3500 and put it back together with existing externals for say $5000 to $5500
4. Buy a new complete PCM GT40 for $6500 and install and be done for under $7500.
5. Buy a new PCM Excaliber 330 Hp for $7750 and install and be done for around $8750.
Options 2-5 would not include taking it back to the dealer. Another local reliable mechanic would do the labor.

All of these would still require a new muffler for $500 to 700 for parts. They plan on keeping the boat for a few more years and then sell. I guess that new heads or rebuilding won't hold value and will still be subject to potential problems. I'm leaning towards the new GT40, but I've been told that the motor is really phasing out and parts will just get more expensive and harder to get. So will this be a negative in the future vs. the new Excaliber with the 5.7?

Sorry to ramble on, but it is a lot of money and not an easy choice. What would you do?